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tv   Fareed Zakaria GPS  CNN  August 14, 2011 10:00am-11:00am EDT

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with explosives ormed a compound in afghanistan. 30 people were also wounded. the taliban is claiming responsibility for the attack. the condition of the provencial governor is unclear. those are today's top stories, thank you so much for watching "state of the union." i'm candy crowley. up next for our viewers in united states "fareed zakarka united states "fareed zakarka gps" -- captions by vitac -- www.vitac.com welcome to all our viewers in united states and around the world. i'm fareed zakarka. first up, the most important topic in the world, what is going on with the economy. joining me are two of the most economists in the world, paul krugman and kenneth rogoff. then what in the world would happen if china pulled its money out of u.s. debt? i call it mutually assured destruction. next up, ahmed rashid will join me to talk about pakistan post
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bin laden. an in-depth look at what's really going on in london, what's behind this week's unrest. first, here is my take. over the last week, liberal politicians and commentators in america took to the air waves and op ed pages to criticize the debt deal congress reached. but their not directed at the tea party or the republicans but barack obama, who they claim failed as a president because of his persistent tendency to compromise. this has been a running theme ever since barack obama took office. i think liberals grow up. as the new republicans jonathan chaep brilliantly points out, there's a recurring liberal fantasy that only if the president of the united states would give a stirring speech, he would sweep the country along with the sheer power of his poetry and enact his agenda. in this view, every known impediment to the legislative
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process, special interest lobbying, not to mention certain settled beliefs of public policy are but tiny stick huts trembling in the face of the atomic bomb of the presidential speech. this does happen if you're watching the movie "the american president," but not if you're actually watching what goes on in washington. the disappointment over the debt deal is just the latest episode of liberal bewilderment about barack obama. i have no idea what barack obama believes on any issue, drew westen, "new york times." westen hints his professional experience which is as a psychologist suggests deep traumatic causes for obama's pathology. let me offer a simpler explanation, obama is a centrist and pragmatist who understands in a country divided over core issues, you cannot make the best, the enemy of the good. obama passed a large stimulus
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package within weeks of taking office. liberals feel it should have been bigger. but remember, despite a democratic house and senate, it just passed by one vote. he signed into law an unprecedented expansion of regulations in the financial services industry, though it isn't one that broke up the large banks. he enacted universal health care through a complex program modeled after the republican mitt romney plan in massachusetts and advocated a balanced approach to deficit reduction that combines tax increases with spending cuts. now, maybe he just believes in all these things. maybe he understands that with a budget deficit that is 10% of gdp, the second highest in the industrialized world and a debt that will rise to almost 100% of gdp in a few years, we cannot cavalierly spend another few trillion hoping it will jump start the economy. maybe he believes that while american banks need better regulations, america also needs a vibrant banking system and in
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a globalized economy, constraining american banks alone will only ensure that the world's largest global financial institutions will be british, german, swiss and chinese. he might understand that larry summers and tim geithner are smart people who in long careers in public service got some things wrong, but also many things right. perhaps he understands that getting entitlement costs under control is, in fact, a crucial part of stabilizing our long-term fiscal situation and that you do need both tax increases and spending cuts, cuts, by the way, that are smaller than they appear because they all start from the 2010 budget which was boosted by the stimulus. is all this dangerous weakness, incoherence, appeasement? or is it just common sense? for more on this you can read my column in this week's "time" magazine or at time.com. let's get started.
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joining me now to talk about wall street's wild week, what it means or doesn't mean and what melee behind it and what lies ahead of us. two of the world's top economists, paul krugman won the 2008 nobel prize in economics and he is a columnist for "the new york times." kenneth rogoff is a former chief economist at the international monetary fund, now a professor of economics at harvard university. welcome to you both. paul, let me start with you. the one thing we saw over the week was markets up, markets down, but the one trend that seemed persistent was there is a great demand for u.s. treasuries despite the fact that the s&p downgraded it. you've been talking a lot about this. explain in your view what does it mean that in moments like this u.s. treasuries are still in demand and what that does is push interest rates even lower
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than they are? >> well, what it tells you is that the investors, the market are not at all afraid of what the -- if you like the policy elite or people like standard & poor's are telling them they should be afraid of. we have all of washington, brussels, frankfurt saying deficits this is the big problem. what we actually have in reality the markets are terrified of prolonged stagnation, maybe another recession. they still see government debt as -- u.s. government debt as the safest thing out there, and are saying, if this was a reaction as the s&p downgrade say it was, we're afraid the downgrade will lead to more contractionary policy pushing us deeper into the hole. it's a reality test, right? we just had a wake-up call saying, hey, you've been worrying about the entirely wrong thing. the scary thing is the prospect of what amounts to a somewhat
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reduced version of the great depression in the western world. >> ken rogoff, worrying about the wrong thing? >> well, i think the downgrade was well justified. it's a very volatile world, and the reason there's still a demand for treasuries is they've been downgraded a little bit to aa plus. that looks pretty good compared to a lot of the other options right now. it's a very, very difficult time for investors. there's a financial panic going on at some level. some of it is adjusting to lower growth expectations, maybe a third of what we're seeing. two-thirds is the idea that no one is home, not in europe, not in the united states. there's no leadership, and i really think that's what's driving the panic. >> but you wrote in an article of yours that you think that this is part of actually a broader phenomenon which is that people are realizing this is not a classic recession, not a classic cyclical downturn, this is what you call a great contraction. explain what you mean by that.
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>> well, recessions we have periodically since world war ii, but we haven't really had a financial crisis as we're having now. carmen reinhart and i think of this as a great contraction, the second one. the first being the great depression, where it's not just unemployment, it's not just output, but also credit, housing and a lot of other things which are contracting. these things last much longer because of the debt overhang that we started with. after a typical recession, you come galloping out. six months after it ended, you're back to where you started. another six or 12 months, you're back to trend. if you look at a contraction, one of these post financial crisis events, it can take up to four or five years just to get back to where you started. so people are talking about a double dip, a second recession. we never left the first one. >> so paul krugman, what the
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implication of what ken rogoff is saying is spending large amounts of money on stimulus programs is not going to be the answer because, until the debt overhang works its way off, you're not going to get back to tlend growth. so in that circumstance, you'll be wasting the money. >> no, that's not at all what it implies. i think my analytical framework, the way i think about this, is not very different from ken's. at least i certainly believed from day one of this slump that it was going to be something very different from one of your standard v-shaped down and up recessions, that was going to last a long time. one of the things we can do, at least a partial answer is to have institutions that are able to issue debt, namely the government, do so and sustain spending and, among other things, by maintaining employment, by maintaining income, you make it easier for the private sector to work down that overhang of debt. >> ken, are you in favor of a significant additional stimulus in the way that i think paul
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krugman is? >> no. i think that's where we part ways on this. i think that creates a debt overhang in terms of future taxes that is not a magic bullet because it's not a typical recession. i do think, if we used our credit to help facilitate one of these plans to bring down the mortgage debt in this targeted way, and it could involve a significant amount, that i would definitely consider. that's how i would do it. now, obviously, you know, things go from bad to worse, then you start taking out more and more things from the tool kit, but i would start with targeting the mortgages, then higher inflation, try to do some structural reforms and, of course, if things are still going badly, i'm hope to more ideas. >> i would say things have already gone from bad to worse. this is a terrible, terrible situation out there. we talk about it. we look at gdp, whatever.
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we have 9% unemployment and more to the point, we have long-term unemployment at levels not seen since the great depression. just an incredibly large number of people trapped in basically permanent unemployment. this is something that desperately needs addressing. i would be saying we should not be trying one tool after another from the tool kit a little bit at a time. at this point we want to throw everything we can get mobilized at it. i don't think fiscal stimulus is a magic bullet. i'm not sure inflation is a magic bullet in the sense it's hard to get. so we should be trying all these things. how did the great depression end? how did that end? it ended, of course, with world war ii which was a massive fiscal expansion, but also involved a substantial amount of inflation which eroded the debt. hopefully we don't need a world war to get there. but we need this kind of all-out
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effort which we're not going to get. >> we'll have to take a break. when we come back, we'll ask what exactly should the worries about the deficit be? is that something to be taken seriously at all, when we come back. ♪
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[ male announcer ] want to pump up your gas mileage? come to meineke for our free fuel-efficiency check and you'll say...my money. my choice. my meineke. we are back with paul krugman and paul rogoff, talking about the economy and everything else. before we took a break, you talked about the solution to getting us out of this crisis and you compared it to the '30s and pointed out that world war ii got us out of the depression, a massive stimulus, massive fiscal expansion. aren't we in a different world? we are right now, the united states, at 10% of budget deficit, 10% of gdp, the second highest in the industrial world. in two years our debt-to-gdp ratio goes to 127%. to me there's an up fer limit.
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you can't spend the money and incur these larger debt loads. >> i think those numbers are high about the debt levels a couple years out. the main thing is think about the costs versus benefits right now. basically the u.s. government can borrow money and repay in constant dollars less than it borrowed. are we really saying there are no projects, that the federal government can undertake to have an even slightly positive rate of return, especially when you bear in mind that many of the workers and resources that you employ on those projects would otherwise be unemployed. the world wants to buy u.s. bonds. let's supply some more and let's use those bonds to do something useful which might, among other things, help to get us out of this terrible, terrible slump. >> ken rogoff? >> well, i think you have to be careful about assuming these low interest rates are going to last indefinitely. they were very low for subprime
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mortgage borrowers a few years ago. interest rates can turn like the weather. but i also question how much just untargeted stimulus would really work. infrastructure spending if well spent is great. i'm all for that. i'd borrow for that assuming we're not paying boston big dig kind of prices for the infrastructure. >> wouldn't john maynard cane say, they're being productively employed, they pay taxes, so maybe boston's big dig was just fine after all? >> think about world war ii, right? that was actually negative for social product spending and yet it brought us out. partly because you want to put these things together, if you say, we can use inflation. ken and are both saying that which is anathema to a lot of people in washington but is what the basic logic says. it's very hard to get inflation in a depressed economy. if you have a program in public spending plus innation their
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spending, you can get that. if you think about using all those things together, you can accomplish a great deal. if we discovered that space aliens were planning to attack and we needed a massive buildup to counter the space alien threat and inflation and budget deficits took secondary place to that, this slump would be over in 18 months, and then if we discovered, oops, we made a mistake -- >> yes need orson wells is what you're say? >> there was a twilight zone episode like this which scientists fake an alien threat in order to achieve world peace. this time we need it in order to get fiscal stimulus. >> ken wouldn't agree with that. the space aliens wouldn't work -- >> i think it's not so clear that canes was right. there have been decades and decades of debate about that about whether digging ditch is a great idea. my read of the debate is when government does useful things and spends in useful ways, it's a good idea. but when it just digs ditches and fills them in, it's not
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productive and leaves you with debt. i don't think that's such a no-brainer. there are people going around saying canes was right, everything canes said was right. this is a different animal with this debt overhang that you need to think about from the standard keynesian framework. >> i just don't agree. the debt overhang -- that was an issue in the '30s, too, private sector debt overhang. we came into this with higher private debt than i would have liked. we're paying for the bush tax cuts and bush unfunded wars which leave us with a higher starting debt. the thing that drives me crazy about this debate, if i can say, is we have these hypothetical risks. all those hypothetical things are leaving us doing nothing about what's happening, mass unemployment, mass waste of physical resources. what's happening is we are hemorrhaging economic possibilities and also destroying a lot of lives by
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letting this thing drift off. we're inventing these sometimes ghosts are real. but inventing these phantom threats to keep us from acting. >> do you think the lesson from history, ken, in terms of these kind of great contractions -- other countries have had -- we have not had something like this since the 1930s, there have been other examples, tells you until you get these debt levels down, no matter what the government does, it's not going to get you back to row best growth? >> i do, because what happens as you're growing slowly, the debt problems start blowing up on you. that's happening very dramatically in europe. they had a philosophy and an approach of things are going to get much better, this is an ordinary but big recession, if we can just hang on we'll grow really fast, the debt problems will go away. guess what? they're not growing fast enough. the debt problems are imploding. that's slowing growth, and it's a self-feeding cycle. >> i guess i'm a little puzzled
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here. again, the thing that's holding us back right now in the united states, although there are those peripheral european countries having a very different kind of problem, partly because they don't have their own currencies. in the united states what's holding us back is private sector debt. we're not going to have a self sustained recovery -- >> what you mean is that individuals have a lot of debt on their balance sheets. >> yeah. that's what's holding us back. we do need to bring that down, at least relative to incomes. what you need to do is have policies to make incomes grow. you need -- and that can include government spending which is going to add to public debt, but it's going to reduce the burden of private debt. it can include inflationary policies and deliberate forgiveness. the idea that this has all faded, that we can't do anything to grow because we have to wait for some natural process to bring that debt down, that doesn't follow from the analysis. it is -- there is no huge
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overhang of debt which is, at least i see it, exactly the reason why we need very activist policies. >> ken rogoff? >> i think of course it's important, the concerns over future medical spending. a lot of businesses and people who could invest could hire people are worried of where the government is going, where taxes are going, what's going to happen. >> there's not a hint of that in the data. >> i don't think it's such -- not a hint of that? people aren't hiring. >> because they can't sell. >> a lot of surveys. interest rates are always low before a crisis. you can't necessarily say that that tells you it's not going to happen. >> i guess i'm still in this position of seeing that things that we have no evidence for that are supposed to be dangerous are being -- you're blaming, as lots of people are blaming them for something which looks to be straightforward, there isn't enough spending in the economy. >> we have sentries of examples.
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>> i don't read that history the same way. >> all right. we'll have to leave it at that. paul krugman, ken rogoff we'll have you back to see which way the wind is blowing. thank you. we'll be right back. introducing the schwab mobile app. it's schwab at your fingertips wherever, whenever you want. one log in lets you monitor all of your balances and transfer between accounts, so your money can move as fast as you do. check out your portfolio, track the market with live updates. and execute trades anywhere and anytime the inspiration hits you. even deposit checks right from your phone. just take a picture, hit deposit and you're done. open an account today and put schwab mobile to work for you.
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now for our "what in the world" segment. what struck me this past week was china's reaction to our credit downgrade. its state-run media thundered that america needed to cure its addiction to debt. a hong kong newspaper widely ran on the mainland ran this front page with a banner saying "the american dream is over." it went on to report that washington owes every single chinese citizen about $900 u.s. dollars. another editorial said washington's solution to its debt time bomb was to make the fuse just one inch longer. that commentary has hit a nerve with the chinese people. after a drop in the shanghai stock market, bloggers took to social media sites. one wrote the u.s. suffered a downgrade, why did we become the biggest victim? another said it was a huge mistake to buy u.s. bonds with chinese taxpayer money.
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we must hold those who are involved responsible. here in the u.s. you hear many people worried the chinese government might stop buying american t bills. i think these fears are vastly overblown. the economic situation between china and the united states is the financial version of mutually assured destruction, if you destroy me, i end up destroying you. let me explain let's start with the facts. china is indeed america's biggest foreign lender. it owes about $1.2 trillion in debt. a little known fact is most of america's debt, $14.3 trillion and counting is actually owned by americans in social security trusts, pension funds and by the federal reserve. it is the marginal buyer that matters so china is very important. now, imagine that china were to sell off those $1.2 trillion of u.s. treasury bonds or even a
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substantial portion of them. it's a huge hypothetical. let's play out the disastrous chain of events that would happen if china began to divest. it would trigger panic selling of the dollar. that would, in turn, hurt the u.s. economy which is china's number one export market. not a good idea if you are the beijing government trying to keep your workers occupied in factories across china, producing goods that americans are going to buy. you see china is addicted to a strategy of export-led growth which requires that it keeps its goods cheap which means keeping its currency undervalued which means buying u.s. dollars. but could china slow the purchase of american debt even if it doesn't stop it altogether? yes. but even here it has fewer options than people think. as china's export growth continues, it will have to keep adding to its foreign reserves
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which are now $3.2 trillion. so where can it park that money? does it want to invest in japanese debt and make the yen a reserve currency? anyone who understands the deep animosity between china and japan will see this is unlikely. euro denominated assets are possibility though there's not really something such as a european treasury bill. even e then, do you really want to put all your eggs in the euro basket when the future of the currency itself looks shaky, much more shaky than six months ago. can you be confident the euro will be around 15 years from now? as for british browns, swiss franks, you can buy those, not in the vast quantities china needs given the cash it generates. if china were to stop buying treasuries, remember the value of the waun would rise. imt employment in china would
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fall. guess what beijing was doing? it was buying u.s. treasuries. the reality is that china is trapped in a cycle of buying our t bonds, no matter what in ratings agency says, no other bond market is as big or as safe for china. so ignore all those theorys about china doing america a huge favor. the reality is they have nowhere else to go. we're probably doing them a favor. by the way, in terms of who is paying whom, data from the congressional budget office shows the u.s. pays out some $74 million to china in interest payments on debt every day. that means washington is paying beijing $833 every second. and we'll be right back. i think what we've seen in the last couple months since the killing of osama bin laden, we've seen a real meltdown.
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now time for a check of today's top stories. just hours after a disappointing finish in the iowa straw poll, former minnesota governor tim pawlenty is dropping out of the republican presidential race. pawlenty made the announcement this morning. >> i'm announcing this morning on your show that i'm going to
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be ending my campaign for president. i wish it would have been different. obviously the pathway forward for me doesn't really exist. so we're going to end the campaign. pawlenty poured over a millions r dollars into the straw poll, finishing a distant third place behind michele bachmann and ron paul. scaffolding around a stage at indiana state fair collapsed last night. witnesses attending a concert say a powerful gust of wind blew through. authorities say there may be more casualties. two men are charged with murder in the hit-and-run deaths during riots in london. the victims were mowed down a car while trying to protect businesses in the city of birmingham from a lotters. those are your top stories. now back to "fareed zakarka gps." the united states will soon begin its drawdown from afghanistan. as that happens, greater and
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greater attention will be focused on next-door neighbor pakistan. that is where much of what remains of al qaeda's leadership lives. it is, of course, a nuclear nation that is in terrible turmoil, filled with bombings, assassinations and what often seems like just chaos. to talk about it all, i'm joined from the finest journalist writing in pakistan, ahmed rashid. the female suicide bomber wearing avail detonates herself. even for pakistan this is unusual. >> very unusual. we've had one or two female suicide bombers, but they've been chechens. this is the first time i've heard of one in the center of pausch shar. this is very much a new development oovps. >> do you look at what's going on right now and feel as though there is some kind of system in place to deal with this rising
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militancy. is the army mobilized? is the political class mobilized? >> i think what we've seen in the past couple months since the killing of osama bin laden, we've seen a meltdown. the army has felt human i'm ated, embarrassed, demoralized to some extent. the politicians have kind of abandoned the scene and told the army, you sort it out, this is not our problem. there's a huge rift between the government and the army and the americans. that is, of course, affecting economic confidence because we have no deal with the imf nor the world bank or any of the usual big donors who should be giving money or pledging some kind of funding to pakistan at this stage. so there are a whole raft of issues that have arisen which are worrying people enormously. >> let's talk about the rift between pakistan and the u.s. of course, some of it, the most
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recent about of it stems from the osama bin laden shootings. what is the civilian government doing. what is the army doing? >> first of all, this has been building up for quite some time. the real sort of icing on the cake has been the death of osama bin laden because that is an operation carried out i think largely without pakistani knowledge or involvement. and the army did feel very embarrassed and humiliated. that, of course, has created this wave of anti-americanism, both in the public and the army and has forced the army chief to also show a very hard line towards the americans. at the moment we have a complete breakdown. in the midst of this, president sa darya has abandoned the stage. we haven't seen any leadership from him. since bin laden's death, he hasn't made a single statement on terrorism or anything like that. >> would it be fair to say because of this rift in relations, the pakistani military is not pursuing the
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kind of militants, those militants who kill afghans and american troops and coalition troops? >> well, it certainly is not going to pursue it right now with this complete rift between the park military and american military. they're barely on talking terms. >> how do we get out of this? how do we get back to some kind of working relationship? >> i think there's a huge problem here, too. that problem is there doesn't seem to be a central figure. since the death of richard holbrooke, who will deal with pakistan. you've got admiral mullen, the chairman of the joint chiefs who has been very up front in dealing with pakistan. but you need a senior member of the white house or the state department to be running the policy. unfortunately, it appears from pakistan's side that the people running the policy here at the cia and the military. there's no political strategy from the american side, no
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political equivalent of holbrook or with the secretary of state or the deputy secretary of state or somebody getting involved in talking to the pakistanis. >> while all this is going on, the militancy in pakistan, the fundamentalism, the jihad difficults seem to be thriving as the suicide bombing suggests? >> absolutely. remember right off bin laden's death we had the attack on the naval base in karachi. that, too, was extremely embarrassing and humiliating for the military. secondly, how are we going to turn around this huge wave of anti-westernism, anti americanism in an army which for the last 60 years has been totally dependent on the americans forearms, for weapons, for aid, something like $20 billion has been given in the last ten years by the americans,
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a lot of it to the military for conducting operations against the pakistani taliban and the extremists on the border. now, who is going to pay for these operations? are we in a position to pay for a billion dollars operation over three months to chase pakistani taliban? i don't think we're in a position to pay for that kind of operation. so that is going to mean the operations will be reduced. there will be increasing use of air power, less use of manpower, and the extremists are going to be taking advantage of this. >> in a strange sense, pakistan may be getting a whole lot more unstable. >> i think what is urgently needed is for the u.s.-pakistan relationship to lurn in some shape or form as quickly as possible. cooperation between the cia and the military and at the political level to resume. at the moment right now we've got a very hostile american
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congress who are very anti-pakistan. that has to be turned around. that can only be turned around if the relationship between the obama administration and the pakistan government improve. >> ahmed rashid, thank you, fascinating, somewhat depressing conversation. thank you. we will be back.
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welcome back. this past week, the world watched london burn. rioters set fire to buildings, smashed high street shop windows and looted everything from tvs to toothpaste. how did that happen in britain and why? joining me now, two british writers and thinkers who can help us understand. david good hart s&p the editor at large of pros speblth magazine which he founded. joining us from london. all the way from brazil yeah, british writer theodore dal wrim who wrote as a psychologist for many years and wrote about it. there is something for most of us a kind of -- a sense of cognitive dissonance. when we think of the british, we think of people queueing and
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afternoon tea and things like that. of course, there is another side to britain. when i was young there were the brick stone riots and all that kind of thing. what is going on? why is this happening in britain right now? >> well, it may just have been a kind of one-off moment of mayhem. it may be a lot more serious than that. we may now start to see this on a regular basis. we clearly do -- we've known for a long time, we have a lot of deep problems in our inner cities. the economic boom over the last ten or 15 years has partly covered that up. but there's a whole culture of knee hillism amongst a hard core of people in the inner city. a lot of it comes from the black hip-hop and rap culture, picked up by a lot of white kids as well. this idea that you can't make it
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in straight society, so violent transgssion is really the only thing to do. >> theodore, i saw a piece or an interview i think you did in the "wall street journal," and you seem to feel that british policing or lack of policing, i suppose, is partly to blame. >> yes. one of the things that these people will have learned is impunity. our levels of punishment, our levels of detection are so low that actually the mystery as to why it doesn't happen more often, not why it happens at all. why people don't go burgling all the time, i can only assume is that they can't do the arithmetic that allows them to calculate the odds of getting away with it which are extremely high. but if people feel they have nothing to fear and they are correct in that, almost -- one can almost say the only people to fear the british police now
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are the innocent, then this is the kind of thing that one could expect. >> david, what do you think of that? is that sort of -- that britain has gotten too soft and squishy toward criminals? >> there's something in that. although actually crime has fallen quite sharply in the last 20 years or so. i think these people are the sort of bastard offspring of british liberalism in a way. we've had a political class center left and center right which has been economically liberal and socially and culturally liberal now for the last 20 or 30 years. i think the really interesting question is can that liberalism produce a kind of tough love. >> but theodore carl rim, you would say the tough love should be a kind of traditional tory police -- tough policing, correct? >> well, i think that's one of the things that can be done. but i'm obviously one doesn't want a society in which the only
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reason people behave reasonably well is because a policeman with haul them off to prison the moment they do something wrong. that's probably not entirely practicable. but what we must not also forget here is that the -- these people grow out of a culture, and that culture is not confined to them. every british town and city, every friday and saturday night is a scene of debauchery and potential violence. this is not an exaggeration. i see it in my own little town. the only thing that the counsel can think of doing in the face of repeated vandalism by drunks at 2:00 in the morning is to extend the licensing hours to 4:00 in the morning. if we cannot even deal with something like mass public
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drunkenness, which actually is easy to deal with, sf we can't deal with that, we're not going to deal with more difficult social problems. >> david, what about another cause that people look at? and i've seen some mention of a paper put out by the center for economic research and policy which looks at austerity measures over the last hundred years and says every time you have sharp cuts in government budgets, sharp cuts in social services, you see rioting and instability. i'm summarizing a very long paper, but that's the basic idea. do you think the british budget cuts are in some way responsible for this rioting? >> no, absolutely not. the truth is the cuts, such as they are, have not begun to bite yet. they're in their infancy. a lot of money has been spent on the inner city in the last 15 years. in conditions there, both
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economically and in terms of education and in a sense sort of socially and culturally are miles better than they were. it's a great challenge. this is not a normal policy issue that can be solved by policy wonks. >> theodore, finally, let me ask you, what david is suggesting a actually a remarkably conservative idea, that there are cultural roots to this violence. is there a cultural solution to it then? >> well, in the long term that's the only solution to it. so i agree with him wholeheartedly that it is a culture. but it's a culture that has actually come, i'm afraid from intellectuals. >> so david, it's your fault. >> i don't think that's entirely true. i think at least the black side of this -- it has a perverted root in a genuine struggle for justice. i think some of the -- a lot of that -- a lot of those struggles
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have been won. but the grieve vass has been preserved by kids who just don't know how lucky they are. >> we'll have to leave it there. this is a fascinating conversation. i certainly hope it's a one-off. we will have to see. gentlemen, thank you very much, very much appreciate the conversation. >> thank you. >> we will be right back. [ martin luther king jr. ] i still have a dream that one day on the red hills of georgia, the sons of former slaves and the sons of former slave owners will be able to sit down together at the table of brotherhood. i have a dream today! [ male announcer ] chevrolet is honored to celebrate the unveiling of the washington, d.c., martin luther king jr. memorial. take your seat at the table on august 28th.
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my money. my choice. my meineke. this week the dalai lama stepped down as political leader of tibet and a new prime minister was sworn in. that brings us to our question from the gps challenge which is what makes the new tibetan prime minister different from other heads of stated and the rest of the world? is it a, he's only nine years old, b, he's blind and deaf, c, he doesn't live in the country he runs, or d, he is believed to be a human manifestation of god? stay tuned and we'll tell you the correct answer. make sure you to go to cnn.com/gps for ten more questions. while you're there, check out our website, the global public square. you'll find smart interviews and takes from some of our favorite experts. you'll also find all our shows on there. if you missed one, you can watch it. also follow us on twitter and facebook.
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the events in london this week reminded me of a book that explores thuggery in britain, and it is our book of the week. it's bill buford's "among the thugs," a fascinating examination of the soccer hooligans that plagued the nation 15 years ago. britain successfully got that problem under control. can they fix the current problem? read this book for insights. for the last look, this week, another installment in the on going adventures of our favorite superhero vladimir putin. while most world leaders were drowning under crises, putin was breathing under the seas, he went diving in greece when, with t slfrnlths cameras rolling, oh, my goodness, what is that? amazing. he discovered these two ancient greek urns, and with power comes privilege, apparently he got

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